Appeal from an order of the United States District Court for the Southern District of New York (Rakoff, J.) holding that the " separate entity rule" precludes a court from ordering a garnishee bank operating branches in New York to restrain assets of judgment debtors held in foreign branches of the bank.

REMANDED to the district court to vacate the restraining order on defendants' assets.

Dwight A. Healy, White & Case LLP, for Amici Curiae Institute of International Bankers, The Clearing House, European Banking Federation, and New York Bankers Association.

CALABRESI, CHIN, and DRONEY, Circuit Judges.

OPINION

PER CURIAM:

This appeal challenges an order entered by the United States District Court for the Southern District of New York (Rakoff, J.), holding that the " separate entity rule" precludes a court from ordering a garnishee bank with branches in New York to restrain assets of judgment debtors held in foreign branches of the bank. The district court initially granted a restraining order, then held that defendants' assets in foreign banks could not be restrained because of the separate entity rule, and then stayed the release of the restraint on assets pending appeal.

The facts are set forth in detail in our opinion filed in this case on January 14, 2014. See Tire Eng'g & Distrib. L.L.C. v. Bank of China Ltd., 740 F.3d 108, 112-13

Page 161

(2d Cir. 2014). In that opinion, we certified the following question to the New York Court of Appeals: " whether the separate entity rule precludes a judgment creditor from ordering a garnishee bank operating branches in New York to restrain a debtor's assets held in foreign branches of the bank." [1]Id. at 118.

In an opinion filed October 23, 2014, the Court of Appeals answered the certified question. Motorola Credit Corp. v. Standard Chartered Bank, No. 162, (N.Y. Oct. 23, 2014), available at 2014 WL 5368774. The Court answered the question in the affirmative, holding that " a judgment creditor's service of a restraining notice on a garnishee bank's New York branch is ineffective under the separate entity rule to freeze assets held in the bank's foreign branches." The Court of Appeals thus explicitly adopted the separate entity rule, concluding that " it is a firmly established principle of New York law, with a history of application both before and after the 1962 adoption of the [New York Civil Practice Law and Rules]."

The Court rejected plaintiffs' contention that its decision in Koehler v. Bank of Bermuda Ltd., 12 N.Y.3d 533, 911 N.E.2d 825, 883 N.Y.S.2d 763 (2009), abrogated the rule, observing that " we did not analyze, much less overrule, the separate entity doctrine in Koehler." Motorola, No. 162, A minority of the Court argued that " the majority's adoption of the separate entity rule [was] inconsistent with Koehler," (Abdus-Salaam, J., dissenting), and that the rule " has no application to these modern times," (Abdus-Salaam, J., dissenting). The majority ruled, however, " that abolition of the separate entity rule would result in serious consequences in the realm of international banking to the detriment of New York's preeminence in global financial affairs." (majority opinion).

The ruling of the Court of Appeals resolves the principal claims before us. We hold that the district court correctly concluded that the separate entity rule precludes the restraint of assets held in Standard Chartered Bank's foreign branches. We thus remand the case to the district court, with instructions to vacate the restraining order on defendants' assets.

REMANDED.

JUDGMENT

The appeal in the above captioned case from an order of the United States District Court for the Southern District of New York was argued on the district court's record and the parties' briefs. Upon consideration thereof,

IT IS HEREBY ORDERED, ADJUDGED and DECREED that the case is REMANDED to the district court, with instructions to vacate the restraining order on defendants' assets.

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